Arbitrage causes all financial assets
A)of the same risk level to have the same price.
B)to have the same expected rate of return.
C)to have the same beta.
D)of the same risk level to have the same average expected rate of return.

Question

Quizplus · Accepted Answer

Arbitrage ensures that financial assets of the same risk level have the same average expected rate of return, as investors will exploit price differences until they are eliminated.

Arbitrage Causes All Financial Assets